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Most leaders expect some councils to face ‘serious financial crisis’ next year

Almost three-quarters (74%) of council leaders are expecting some local authorities to plunge into a “serious financial crisis” next year.

The ‘Local state we’re in 2018’ report surveyed 81 local authority chief executives and leaders across the UK, along with a poll of over 2,000 members of the public.

A whopping 74% of council respondents said that they expect some councils to get into serious financial crisis in the next year – a 20% increase in the dear of failure compared to last year.

A major recent example of this is Northamptonshire County Council, which effectively went bankrupt, while Somerset is now rejecting claims that it too is on the brink of collapse.

The drive for savings continues, with 72% of council respondents saying they have coped well with austerity while remaining confident that they can deliver savings next year without impacting on quality of service outcomes.

However, the survey suggests that “a cliff edge” remains, with a third of local government chiefs being worried that they won’t deliver savings over the next three years. This figure skyrockets to 81% when considering this over the next five years.

There also appears to be a perception that devolution has stalled, with just 13% of respondents agreeing that their council will have more powers in 2022 – a large drop from 2015, when a third believed that they would be granted increased powers.

Commenting on the report, Jonathan House, PwC’s local government and health leader, said: “This year’s survey shows the significant step up in the challenge for local government leadership in securing the future for their councils, as well as ensuring they are financially sustainable. While local councils have done well against an ongoing course of challenges, the cliff edge for some is getting ever closer.

“With another Spending Review next year, as well as the UK’s formal exit from the EU, the landscape will become incredibly tough - the resilience they have shown so far will be tested to the max.”

The report highlights six key challenges that local government must respond to. These include the delivery of sustainable, place-based growth strategies to attract and retain talent and investment; reforming public services to underpin place-based transformation; securing organisational resilience; developing commercial skills and business acumen; investing in data analytics; and harnessing digital disruption and new technologies such as artificial intelligence.


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